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FAQs on transaction reporting – Question II.1.1.2

The term “Broker” is mentioned when defining Organised Market Places; that is, a Broker is considered an Organised Market Place. Elsewhere in TRUM there is the term “Executing Broker”. We consider our company an Executing Broker, as we execute client orders. Do these two terms, “Broker” and “Executing Broker” somehow overlap? Is an Executing Broker considered an Organised Market Place?

We would be grateful if ACER could clarify what is meant by “a Person Professionally Arranging Transactions”, so we might decide if we are a PPAT or not. This is relevant for us, as to our understanding the Organised Market Place obligations apply to PPAT’s, so if we are a PPAT we would have to have market surveillance etc.


Answer:

The Agency considers a broker a person or a firm that arranges transactions between a buyer and a seller for a commission when the deal is executed. This is not necessarily an Organised Market Place (OMP). Please see Article 2(4) of Commission Implementing Regulation (EU) No 1348/2014 for the OMP definition. Broker platforms are mentioned as examples for OMPs, but this does not mean all brokers automatically have to be considered as OMPs. This will only be the case if they fulfil the OMP criteria stipulated in Article 2(4) of Commission Implementing Regulation (EU) No 1348/2014.

An example of a broker who is not an executive broker would be a person facilitating deals between a buying and a selling side and then passes the names to both so that they can confirm a bilateral trade without the engagement of the broker.

An executing broker is a firm that executes deals on behalf of its clients on an OMP. An executing broker places an order and executes it without bringing together buying and selling side. The executing broker would not be an OMP.

However, in some circumstances, a brokerage firm (when considered a REMIT OMP) may offer the service of executing broker to their clients. The firm is providing two different services: one as OMP and one as executing broker. For the executing broker business the firm will be considered a REMIT market participant (please see Annex III to the TRUM available on the REMIT portal). This firm should register its executing broker business (and only that) as market participant with the relevant National Regulatory Authority.

With regard to Person Professionally Arranging Transactions definition, please see Question II.3.7 in 10th edition of the Agency’s Q&A on REMIT available on the REMIT portal.

Last update: 16/11/2015   RSS_Icon Subscribe to this Page’s RSS